For any business to excel in the competitive marketplace of the modern era, it is essential to accept credit card payments. From a high-end restaurant to even the farmer’s market, customers expect advanced payment options that are secure, instant, and convenient.
While it appears intimidating, there are several benefits of accepting credit card payments for businesses:
- Improved Cash Flow: In comparison to paper checks, acceptance of electronic credit card payment means receiving funds within 1-2 days.
- Boosted spending: Credit cards offer a continuous line of credit so customers feel more comfortable and confident in spending more.
- Increased Sales: In addition to cash, offering advanced payment options helps in attracting more sales and eventually, more profits.
- Keeping Businesses Competitive: With an increasing number of businesses accepting credit cards already, credit card processing offers customers a reason to shop with a particular business rather than the competition.
- Strengthened Customer Retention: As multiple payment options are offered, businesses can boost the overall customer experience while improving the chances of customers coming back.
Steps to Accept Credit Card Processing for a Business
#Look for a Credit Card Processor for the Small Business
There are several payment processing providers offering similar services. It is important to consider the amount of credit card transaction processing online, over the phone, and in person. Businesses should also think about the type of credit cards they will be accepting –American Express, Discover, Mastercard, and Visa.
Processing fees may vary between card networks and transaction types. It is in the best interest of the business to find the provider offering the most competitive fees for different types of credit cards and the transactions that will get processed the most.
Businesses should also consider the overall volume of transactions that will get processed, because some providers offer access to better rates for processing a large number of transactions. If there is the case of an online-only business, it is important to ensure that the payment process chosen integrates easily with the website. In case of brick-and-mortar businesses, look into the hardware required for purchasing (for instance, payment terminals) to find out whether or not they will be compatible with the current POS or Point of Sale system.
#Launch the Merchant Account
Once the credit card processor has been selected, the creation of a merchant service account should take place. While businesses might be already making use of famous providers like PayPal for ensuring personal transactions, it is important to set up a separate business account to enable the business to accept credit card payments.
Creation of the merchant account usually involves offering some information about the business and setting up a proper connection with the business bank account where funds will get deposited.
#Launch Payment Terminals
For accepting credit card payments, the final thing that businesses should do is to set up payment terminals across the business.
If there is a brick-and-mortar shop, the step includes ordering and installing hardware –like the POS or card reader. There are various types of card readers available in the market that allow businesses to accept payments through a swipe, a contactless tap, or an inserted chip.
If sales are executed online, there is the requirement of setting up online payments. If the business is using some e-commerce shopping platform like Shopify, the payment portal will come with the e-commerce platform. If there is a dedicated website, there might be the requirement of relevant technical support from the website developer or the credit card processor for including credit card processing on the website for small businesses.
It is also important to go through proper training resources from the payment processing provider for understanding how to make the most of the existing software and hardware.
#Decide the Mode of Accepting Credit Card Payments
Depending on the type of business being operated, it is important to consider the manner in which credit card payments will be accepted. There could be a single way or a combination of different ways based on the unique needs of the business.
- Mobile: Does the business offer field services at the locations of the customers? Or, does a business attend conventions, fairs, and other events taking it outside the physical store?
- Online: Is there a requirement for selling products or services on the website or in the app? Does a business require allowing its customers to pay online?
- In-person: Is the business accepting payment at the end of service or during checkout at the brick-and-mortar location?
- Via Mail or Phone: Are the customers calling in orders or returning paid invoices through the mail?
#Analyze the Type of Credit Card to Accept
Upon signing up for the merchant account, businesses are automatically set up to accept Discover, MasterCard, and Visa transactions. However, there are other types of credit card processors that offer advanced services –like American Express. Based on the unique requirements of the business, it is recommended to look into the right type of credit card for accepting payments.
#Assess the Credit Card Processing Fees
When businesses have a better understanding of the fees linked with credit card processing, it will aid in the overall research while making sure that the business is making the most profits on every transaction.
Some fees are:
- Interchange Fees: This represents the largest portion of credit card processing fees. Therefore, it is non-negotiable and comes with a flat charge along with a percentage of the total transaction amount. This fee is also called Wholesale Merchant Discount Rate.
- Assessment Fee: It is the amount charged by card brands for utilizing the networks, and is charged usually between 0.13 percent and 0.15 percent depending on the respective card brand.
- Discount Fee: It is the fee charged by the payment provider for covering the total cost of credit card processing and features the interchange costs from the respective card brands along with fees for ensuring front-end authorization, reporting, back-end statement, the acquiring bank, and PCI compliance.
When businesses are aware of the specific requirements for merchant account setup in case of credit card processing, it helps them provide value to customers and earn more profits.